Global Production of Biofuels Regains Momentum, According to New Research by Worldwatch Institute

By Christina Wright, Worldwatch Research Intern

Global production of biofuels increased 17 percent in 2010 to reach an all-time high of 105 billion liters, up from 90 billion liters in 2009. High oil prices, a global economic rebound, and new laws and mandates in Argentina, Brazil, Canada, China, and the United States, among other countries, are contributing to the surge in production, according to research conducted by the Worldwatch Institute’s Climate and Energy Program for the website Vital Signs Online.

The United States and Brazil remain the two largest producers of ethanol. In 2010, the United States generated 49 billion liters, or 57 percent of global output, and Brazil produced 28 billion liters, or 33 percent of the total. Corn is the primary feedstock for U.S. ethanol, and sugarcane is the dominant source of ethanol in Brazil.

In the United States, the record production of biofuels is attributed in part to high oil prices, which encouraged several large fuel companies, including Sunoco, Valero, Flint Hills, and Murphy Oil, to enter the ethanol industry. High oil prices were also a factor in Brazil, where every third car-owner drives a “flex-fuel” vehicle that can run on either fossil or bio-based fuels. Many Brazilian drivers have switched to sugarcane ethanol because it is cheaper than gasoline.

Although the U.S. and Brazil are the world leaders in ethanol, the largest producer of biodiesel is the European Union, which generated 53 percent of all biodiesel in 2010. However, some European countries may switch from biodiesel to ethanol because a recent report from the European Commission states that ethanol crops have a higher energy content than biodiesel crops, making them more efficient sources of fuel.

In the United States, however, the Environmental Protection Agency (EPA) made the decision to dramatically lower the country’s production target for cellulosic ethanol, a biofuel that is made from woody plants or crop waste and that can be converted to ethanol much more efficiently than conventional ethanol, resulting in lower associated greenhouse gas emissions. The EPA’s target reduction reflects the technical challenges and high costs of commercializing so-called ‘second-generation’ biofuels. Instead of the 950 million liters required initially under the 2007 Energy Independence and Security Act, the final target will be a much smaller 25 million liters.

Proposed legislation in the U.S. Senate would cut current ethanol production subsidies while maintaining tax credits for related infrastructure such as refilling stations. If supports like subsidies and tariffs are removed, sugarcane ethanol from Brazil will likely become more prevalent in the United States. Although sugarcane ethanol has the benefit of being cheaper and more efficient to produce, there are concerns that increased production will speed deforestation in Brazil as more land is cleared for feedstock cultivation.

The new Vital Signs Online article highlights both the increases in global production of biofuels and the factors behind this growth. It presents the latest facts and figures on the major biofuels producers and outlines new laws and mandates that will affect production of the fuels.